Broad Market Outlook
Stocks could not catch a bid last week as the overall market finally dipped its toe into correction territory. Closing the week down 10.65% off all time highs. This was our first correction of 2023 as we grew acustom to the breakout market we experieced for most of the year until recently.
Oftentimes as we enter into a correction, things look bleak and understandably so. Markets rarely correct on positive news. As the FED has stopped there rate rising agenda to curb inflation. The 10 Year has had enough of a push from the FED that rates continue to climb. But, we saw last week that 5% has started to act as resistance for now.
As rates push higher, the market will continue to push lower. If the 10 Year can flag out in this 5% to 4.3% range, we could see a snap back out of the market.
This weeks newletter I focused on the weekly charts of all the major market and sectors. To remind us to look at the bigger picture. As much as we want to see the 10 year fade and the market to climb out of this correction. The odds are not stacked in that favor.
With virtually every sector breaking macro support and closing bearish engulfing, we should expect the selling pressure to continue into the week ahead.
As we reviewed some recent corrections that we have seen in the past, most of the bottoms took anywhere from 1 to 3 weeks to really settle out before snapping back. As you can see below:
We have done a great job as a group focusing on taking the base hits when they have shown themselves in this market. If we can continue to work on our patience to let this correction run its course. More or so as the last few corrections we have seen. We should be able to position ourselves when the time is right.
We are not at that position just yet. It seems the next major test in the market is if the S&P can hold up the 400 psychosocial level that has held up since April.
Lets go into this week remembering that the last 4 corrections took anywhere from 1-3 weeks to settle out. And we are barely into the start of the second week.
Macro Rotation Outlook
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Sensitive - sectors that have moderate correlations to overall market conditions.
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Cyclical - sectors that are more sensitive overall market conditions.
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Defensive - sectors that tend to outperforming during sub par market conditions.
Big Picture Set Up's
Even with the overall market weakness, ADBE has pulled back off its recent highs. But the pull back has been very orderly into support. It can easily break support to the downside as most names have, but if it can hold and turn back up. Could be a solid support buy back set up.
If this HAS can bear flag out for a bit near its 52 week lows, could be a good short idea as when names are hovering near 52 week lows, new lows are often right around the corner.
TMUS has been flagging out under this 145 in a decent range since September. It might need some more time to consoldate further but a solid bull flag in the telecom space.
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